In July 2022, the United States, Massachusetts, and Connecticut settled a False Claims Act case that our client brought against BioReference Health, LLC. BioReference is one of the largest clinical laboratories in the United States. The case alleged that BioReference paid kickbacks to physicians to induce referrals for its laboratory tests.
In announcing the settlement, United States Attorney Rachael S. Rollins said:
Medical decisions by doctors should be based on what is best for each patient, not a doctor’s personal financial interest. When companies violate the federal health care laws that are meant to protect patients, health care costs for hard working people increase. We will continue to find fraud and use the False Claims Act to make companies that break the law pay back the taxpayers they defrauded as well as pay a financial price for their misconduct.
Under the terms of the False Claims Act settlement, the defendants will pay $10 million, plus interest. BioReference also has entered into a Corporate Integrity Agreement with the HHS Office of Inspector General (HHS-OIG).
The government alleged that BioReference induced physician practices to send their laboratory business to BioReference by paying them above-market rent. The payments were for BioReference to lease space for its Patient Service Centers (“PSCs”). PSCs are locations where BioReference collects patients’ blood samples for testing. These excessive lease payments violated the Physician Self-Referral Law (commonly known as the Stark Law) and the Anti-Kickback Statute (“AKS”). As the United States Attorney’s Office explained in its press release, “Both the Stark Law and the Anti-Kickback Statute are intended to ensure that physicians’ medical judgments are not compromised by improper financial inducements.” Because of these improper payments, BioReference submitted or caused the submission of false claims for payment to federal healthcare programs.
Defendants admitted that, for several years, BioReference made lease payments to physicians and physician practices that exceeded fair market value. Defendants further admitted that, in deciding whether to open, maintain, or close PSCs, BioReference analyzed referrals from nearby healthcare providers. Significantly, BioReference considered referrals from many of the physician-lessors who received excessive rent payments. Finally, defendants conducted internal audits between 2017 and 2019 that identified excessive lease payments to some physician-lessors. However, they failed to report or return any overpayments to government health care programs.
Our client provided government prosecutors with information about the alleged fraud. In 2019, we filed a qui tam complaint under federal and state False Claims Acts. Under the False Claims Act, a private citizen (known as a “relator”) who suspects or knows of fraud against the government can act as a whistleblower and file a sealed complaint on behalf of the government. For successful cases, the government pays a share – between 15% and 30% – to the relator. In this case, our client will receive 17 percent of the recovery.
In DOJ’s press release, the Federal Bureau of Investigation thanked our client, stating:
Laboratories that scheme to enrich their businesses through health care fraud—such as by paying kickbacks—drive up health care costs for everyone. This settlement shows how seriously the FBI takes its responsibility to weed them out, and we’d also like to thank the whistleblower in this case for helping us ensure these entities are held accountable.
-Joseph R. Bonavolonta, Special Agent in Charge of the FBI Boston Division
As this case illustrates, whistleblowers are a critical part of fraud enforcement. Last year, according to DOJ, qui tam cases resulted in over $1.6 billion in False Claims Act recoveries. DOJ noted in announcing this settlement that the False Claims Act is one of government’s most powerful tools to combat healthcare fraud.
The Whistleblower Law Collaborative LLC, based in Boston, devotes its practice entirely to representing clients nationwide in bringing actions under the federal and state False Claims Acts and other whistleblower programs. Among the firm’s many successes is a $234 million settlement earlier this year with Mallinckrodt under federal and state False Claims Acts for Medicaid rebate fraud.